So what a political, economic and ideological mess.
During the Bolivian elections, I found myself a bit worried about the outcome because I was worried about Petrobras, the Brazilian petroleum company. I knew that the previous government had fallen over privatization and that the new president would most likely be a nationalist and that the nationalist would probably nationalize the national gas industry and possibly also petroleum.
As most people know by now, Evo Morales was elected and immediately began implementing a nationalist project. He has legalized the coca crop and cozied up to Fidel Castro and Hugo Chávez. It would be difficult to look at Morales and not think of the great populists of the last century: Vargas, Cárdenas, Perón, Franklin D. Roosevelt… and Chávez. And once again it was clear that, just as with Vargas, Cárdenas and Perón, Morales would not resist the temptation and indeed the demands from the public to nationalize the petroleum and natural gas industries.
Yesterday Morales celebrated Labor Day by making the big announcement: Bolivia would seize control of all oil and natural gas resources. In a dramatic action, he sent the army to occupy oil fields and refineries. Although this barely merited a mention in the U.S. media, it was a top headline in Brazil, Argentina, Spain, France and Britain because all of those countries host businesses that have investments in Bolivian natural gas and petroleum. Indeed, Morales’ announcement did have repercussions in the U.S. (stock markets that were up in the morning went down dramatically after news spread), but news from the Americas that does not directly impact the pocketbook rarely makes front-page news in the United States.
While most North Americans might hear the news of nationalization and have no response, a Brazilian who is reasonably aware of current events would hear the news with intrepidation. Over the last nine years, Petrobras, the Brazilian national oil monopoly (which is now a publicly traded company), has become the largest foreign company in Bolivia; Brazilians immediately began to worry about Petrobras and the billions of dollars that they stood to lose. By this morning, there was another growing concern: natural gas. Over half of the natural gas that Brazilians use is Bolivian and Brazilian gas consumption has increased as many apartment buildings now have building-wide water heaters (rather than electric heaters on shower heads). People were worrying about their hot showers.
Still, this issue creates an interesting political and moral problem for the Brazilian left. On one hand, the left is generally opposed to privatization. Even left-leaning proponents of the neo-Liberal bonanza of the 1990s have come to see that some industries—including those that control important resources and services such as electricity, telephone and water—should not be subject to the whims of profit and foreign interest. Beyond that, there is a long-running feeling in Latin America that the people should own resources that are in the ground including gas, oil, minerals, ores and water. This sentiment explains why most Latin American countries have nationalized gas, petroleum and mining industries at least once since the 1930s. Although the most famous examples of this occurred in Mexico and Brazil (both in 1938), it is interesting to note that this is the third time for Bolivia (1937, 1969). Still, it is hard when your country suffers. Petrobras is perhaps Brazil’s biggest patron of the arts, historic restoration and education. Beyond that, financial losses could mean higher natural gas prices, which no one wants.
Of course, if Bolivia has nationalized petroleum twice before, one might wonder why companies like Repsol, Total and Petrobras were willing to invest in the country. It was an open market, a place that needed major capital investment but had vast resources. It was also the late 1990s and I think it was hard for companies to imagine a turn away from the neo-Liberal policies that governed the world. This is particularly the case in countries with large debts to the IMF or the World Bank, both of which were force-feeding privatization on debtors. It is a sort of blind faith that a lot of South Americans in particular have, an idea that new or temporary things are permanent and stable. It is this kind of faith, I think, that allows us to see American democracies as permanent even though most of them date only to the 1980s and history is not on the side of enduring democracy.
So anyway, Morales has expanded a bit on what he means by “nationalization”. It turns out that Bolivia does not have the money that would be needed to build the infrastructure that is required for further development of their industry. Instead, he wants to renegotiate the contracts of foreign oil interests with terms that are more favorable for Bolivia. He admits that he dreams of a strong national oil monopoly like those in Brazil and Venezuela but that he will have to raise the money to fund that—and this seems to be a way of doing that. Meanwhile, most of the companies that are currently operating in Bolivia will probably stay and take the cut in profits but they are unlikely to invest in further exploration or development of resources. This is not so great for Bolivia because of their cash flow problems, but perhaps Morales thinks he will raise enough money through these additional gas and oil taxes to begin exploration in areas where the foreign companies are not yet active. If he does this, however, Morales will have to show the fiscal restraint not to divert the oil profits to populist programs that feed and educate the poor (which is what his mentor Chávez does). If multinationals quit pouring more money into development (something that translates into jobs) and the people do not see Morales giving the oil money back to them, it will not bode well for his tenure.
And back in Brazil, this puts Lula between a rock and a hard place. Over the last three years, he has walked a very fine line between the neo-Liberals of the West and other left-leaning nationalists in South America including Chávez and Nestor Kirchner of Argentina. For the first time, he finds himself publicly having to take sides against Chávez (and Fidel Castro) as he defends his own country’s interests.